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1 - Use the Correct Form

While this may seem elementary to you, there are a lot of purchase contracts available. Each state has its own laws. Realtor associations publish purchase contracts. In California, for example, here are some of the forms Realtors have at their disposal:

• Manufactured Home Purchase Agreement
• New Construction Residential Purchase Agreement
• Probate Purchase Agreement
• Residential Purchase Agreement
• Residential Income Property Purchase Agreement
• Vacant Land Purchase Agreement

2 - Determine your Price

Some courts have ruled that offers containing acceleration clauses such as "I will pay $1,000 more than your best offer," do not constitute a bonafide offer. If you have a price in mind – put it in writing!

Barring extreme buyer’s markets or sizzling seller’s markets, in a normal real estate market, you will probably want to offer a bit less than you expect to pay. You can ask for guidance, but don't expect your real esate agent to pick a price for you. Picking prices for a buyer, believe it or not, is not an agent's job.

3 - Make an Initial Earnest Money Deposit (EMD)

In most states, to have a binding purchase offer, you may need to provide a good faith deposit. This could be cash, personal check, cashier's check or other modes such as personal property, real property, mortgages or unsecured promissory notes.

Spell out who will hold the deposit – almost anybody but the seller! (usually the escrow company). If your state has "liquidated damages," the seller could be entitled to retain your deposit if you default under the contract.

4 - Disclose your Down Payment

Your down payment could be cash, promisory notes, stocks, real estate or other assets. Generally, a cash deposit it made. Generally, a verification of your down payment within a certain time-period will be required.

If you are selling an asset such as liquidation of a mutual fund to receive cash – that action could be considered a contingency of the transaction and, if so, you should disclose it.

5 - Describe your Financing Terms

Remember that your deposit, when added to your down payment and financing should equal the total consideration paid.

• Some contracts allow you to specify a maximum interest rate that you are willing to accept, giving you a way to cancel the transaction if your interest rate comes in higher.
• Disclose the type of financing you hope to obtain: conventional, FHA, VA, contract of sale, assumption or other.
• Include maximum points, especially if you are asking the seller to pay them.

6 - Include all Contingencies

California Association of Realtors (C.A.R.) purchase contracts give the buyer by default 17 days to do inspections. Federal law gives all buyers 10 days to inspect for lead-paint, unless waived in writing.

Many contracts carry provisions for such contingencies as:

• Appraisal
• Loan Funding
• Physical Inspections

Depending on your state law, if you do not remove your contingencies in writing, they may still be in effect, all the way to closing!

7 - Negotiate Possession

Most disagreements between sellers and buyers are over possession. Some transactions fall out because sellers and buyers have unreasonable expectations about possession.

• Spell out the possession date. Is it the day escrow closes or a day after closing?
• If possession is prior to closing – execute a rental agreement to protect all parties.
• If possession is more than two or three days after closing – execute a rental agreement to protect the buyer.

8 - Spell out who will pay what Fees

Although most contracts call for fees to be negotiable, some fees, depending on your locale, are customarily paid by one party. If you don't know custom, you may be unintentionally inviting a counter offer. Call the listing agent before you write the offer and ask. Sometimes fees for title, escrow, county or city transfer taxes can equal one to two percent of the sales price. For example, if the seller is paying for title and it's customary for the seller to choose, let the seller choose.

9 - Request what Reports you want to be provided to you

If you are concerned about a specific inspection, request a report. Few disputes irritate a seller more than to find out halfway through a transaction that the buyer had a concern that was not addressed upfront. Sellers feel duped. Buyers feel mislead.

Address the issues you want discovered. Some states allow the buyer to conduct all inspections before writing the offer just to alleviate this type of miscommunication. If it's customary for a seller to provide certain reports, ask for them.

10 - Include an Expiration date of Offer

Transactions sometimes fall through because buyers did not allow enough time for a seller to respond to the offer. If you are unsure, call the listing agent and ask how much time is required. Sellers can be out of town or have emergencies.

Clarify to whom the accepted offer should be delivered to. If it's the buyer, and the buyer is unavailable to accept delivery, the buyer could lose the transaction if another buyer happens to submit an offer. If the buyer is represented by a Realtor, then the Realtor can also receive the offer on behalf of the buyer.

Read your state contract laws regarding offer expiration.